Public investment and regional growth and convergence: Evidence from Greece

Andrés Rodríguez-Pose, Yannis Psycharis and Vassilis Tselios
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Yannis Psycharis: Panteion University

No 2012-05, Working Papers from Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales

Abstract: This paper estimates the impact of public investment on regional economic growth and convergence at the NUTS III level in Greece. Using a new database of public expenditure per region for the period 1978-2007, it proposes a model which captures not just the impact of public investment in Greek prefectures, but also the spillover effects related to the existence of externalities from neighbouring regions. The results point to a positive long-run impact of public investment per capita on regional economic growth – but not on convergence – which also generates considerable spillover effects. However, the returns vary according to different types of public investment, with education and infrastructure spillovers having the highest impact. In general, public investment externalities seem to be more relevant for regional growth than direct public investment in each region. Finally, the impact of different types of public investment in Greece is mediated by politics and political factors, but the effect of politics disappears once we control for political-period-specific spatial-invariant variables.

Keywords: public investment; economic growth; spillover effects; convergence; spatial econometrics; regional economics; regional policy; Greece (search for similar items in EconPapers)
JEL-codes: R11 R12 R53 R58 (search for similar items in EconPapers)
Date: 2012-04-25
New Economics Papers: this item is included in nep-fdg, nep-geo, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

Published in Papers in Regional Science 91(3), August 2012: 487-513

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Related works:
Journal Article: Public investment and regional growth and convergence: Evidence from Greece (2012)
Working Paper: Public investment and regional growth and convergence: Evidence from Greece (2012)
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